Appeals court to hear arguments on 4 sections of Act 13

A state appeals court will hear arguments on Wednesday about whether several sections of Pennsylvania’s contested drilling law can survive after the state Supreme Court struck down key aspects of the law late last year.

The challenges to the state’s 2012 update of the oil and gas law, known as Act 13, have been narrowed to only a handful of issues after the Supreme Court ruled in December that the law unconstitutionally limited local governments’ right to say where well sites, compressor stations and other oil and gas facilities can be located. The high court told the Commonwealth Court to consider if the rest of the law can stand without the zoning rules.

Now, the parties have whittled the fight to four issues they will debate before the judges:

- Does the Public Utility Commission still have jurisdiction to review municipal ordinances that regulate oil and gas development?

- Can the law require DEP to alert public water suppliers, but not private water well owners, of spills?

- Can companies use eminent domain to take property for gas storage?

- Can medical professionals be blocked from disclosing the chemicals used in oil and gas operations?

The two sides agreed not to challenge the validity of the entire, wide-ranging act, which was the first comprehensive update of the state’s oil and gas law since the 1980s and allows the state to collect and distribute an impact fee on shale gas wells. The fee has raised more than $630 million for state programs and communities in the last three years.

“None of the parties wanted to invalidate everything about the act,” said Ross Pifer, a professor at Penn State’s Dickinson School of Law and director of the Agricultural Law Resource and Reference Center.

Given that the entire law seemed at risk in December, the remaining debate is relatively modest.

“They don’t seem to be the kinds of issues that would change the nature of natural gas exploration in Pennsylvania very much,” Duquesne University law professor Bruce Ledewitz said. “The real change took place in the state Supreme Court decision allowing municipalities to apply ordinary zoning.”

That hasn’t made the ongoing battle any less bruising.

In briefs filed to support the PUC’s continued role in reviewing ordinances, the Commonwealth and several oil and gas organizations said the commission still can offer advice to municipalities and hear challenges to their ordinances even though the uniform zoning provisions of the law were thrown out.

The PUC’s review is “essential” to determine if local governments are eligible to receive their share of the impact fee, the commission wrote.

But the challengers — who include several municipalities, local officials, environmental groups and a doctor — said the state and its industry supporters are simply looking for “a backdoor method” of imposing the law’s remaining setback buffers around drilling operations as a cap rather than a minimum, thereby limiting local governments’ say in where operations can take place.

The law’s special system for ordinance reviews wrongly takes the power away from local zoning hearing boards and county common pleas courts and gives it to the commission, “a role the PUC is not equipped or capable of handling effectively and fairly,” the Pennsylvania State Association of Boroughs wrote in a brief supporting the municipalities.

The Pennsylvania State Association of Township Supervisors also backed the municipalities’ position, writing that if the law’s scheme for ordinance reviews is left standing, it would put the PUC and the Commonwealth Court in the position of acting as “local zoning hearing boards, but on a statewide level.”

“This would be an unreasonable result because it would likely lead to decisions being made through the same statewide lens that the Supreme Court rejected,” the association wrote.

Historically, municipalities have been allowed to determine through zoning where oil and gas operations can occur within their borders, but they have been prohibited from controlling aspects of the operations that are already regulated by the state. That standard still applies, said John C. Dernbach, a Widener University law professor who co-directs the school’s Environmental Law Center.

But lawmakers in the General Assembly might try again to define the role that municipalities can play in overseeing oil and gas development, whether or not the court upholds the ordinance review process.

“There is still this open question about what local governments can do after the Supreme Court’s decision, and the legislature may just decide to address that,” he said.

The parties in the court case also disagree about whether a provision of Act 13 is an unconstitutional “special law” because it requires the Department of Environmental Protection to notify public water suppliers but not private water well owners of spills at oil and gas sites.

Challengers argue that private well owners should also be notified of spills because oil and gas operations — and the pollution risks they bring with them — generally take place in rural areas where residents primarily rely on private water wells.

The only reason not to treat all water supply owners the same is “a desire to mask the true effects of the oil and gas industry on rural communities,” the challengers wrote.

DEP countered that it is already the department’s practice to notify private water supply users of “impacts and possible dangers” and it is “an obvious part of the department’s duty to protect all water supplies that may be polluted by gas wells.”

The court doesn’t have the power to replace the current notification with a requirement that the department alert all water supply owners of spills, as the challengers suggest in their “misguided objection,” DEP wrote.

“No notification to anyone of a contamination or spill resulting from oil and gas operations will be required by Act 13 should [the notification requirement] fall,” the department wrote.

Three oil and gas organizations will be allowed five minutes for arguments on Wednesday as “friends of the court,” but a Commonwealth Court judge last month denied their petition to intervene in the case.

The full significance of the Supreme Court’s ruling — including the revival of the state’s environmental rights amendment that gives Pennsylvanians a right to “clean air, pure water” and “the preservation of the natural, scenic, historic and aesthetic values of the environment” — will not be settled by this next stage of the process.

“The biggest issue that remains is: What is the extent of protections that are afforded by the environmental rights amendment to the Constitution?” Mr. Pifer said. “That’s not something that’s going to be addressed on remand before the Commonwealth Court.”

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